Dr Patricia Danzon: Learning From European Health Systems

The United States can benefit from taking and adapting certain elements of European countries’ systems and methods of assessing value, says Patricia Danzon, PhD, the Celia Moh Professor at The Wharton School, University of Pennsylvania.

Transcript (slightly modified)

Is there something that Europe does well in assessing value that the United States can adopt or adapt?

There’s not a single European system that I’d say we would want to adopt wholesale, but there are elements. I think the United Kingdom’s system at measuring health outcomes, using QALYs [quality-adjusted life years], and various spinoffs of QALYs has been refined. It’s really in the English-speaking countries, so it includes the UK, Canada, Australia, and that literature on health outcomes measurement really is the most advanced in the world. I think we can definitely learn something from that, and I would say American academics contribute to that literature. It may not be used by our payers, but the academics contribute to that literature.

The system that is applied in the UK through NICE obviously uses a much lower threshold for willingness to pay—they use the £20,000 per QALY which is way below what we in the United States are willing to pay for health. So, if we were to adopt a system, based on cost per QALY, we would obviously use a higher threshold. But there are other elements of other countries’ systems that I think are worth noting, and one in particular—Germany has a system where when a new drug is launched, the drug can be on the market at a price that the company names for a year. During which, the payer assesses the value and decides whether or not to simply pay the existing price, or do a more thorough evaluation of the benefits of the drug and their appropriate price.

That is a way of getting the drugs on the market right away, without waiting for the launch to occur after the evaluation has been done—which is more of the UK approach, you first do the evaluation, and then you get the reimbursement. The German approach says you can launch with a conditional price, while we do some preliminary evaluation. That, I think, is a better way of doing things because it gets new drugs to market but still gives the payer the chance to evaluate the effectiveness and make an assessment of price relative to value.